Is Crypto Legal in Spain?

I've been living in Spain for five years and trading and investing in cryptocurrencies for more than seven. 

During this time I've noticed a growing interest in the questions: 

"Is crypto legal in Spain?"

The short answer is YES, but there are important regulations to be aware of.

Here's what I've learned from my own research and experience:

Spain defines "virtual currencies" (cryptocurrencies) under Article 1.5 of Law 10/2010, which is primarily concerned with the prevention of money laundering and the financing of terrorism. 

Cryptocurrencies are regarded as intangible assets, employed as a medium of exchange but not as legal tender.

It is incumbent upon investors to declare their crypto assets at the market value on 31 December each year. 

Furthermore, the legislation mandates that individuals and entities holding or managing cryptocurrencies on behalf of others must disclose this information to the relevant tax authorities, effective as of 11 July 2021.

i: The taxation of cryptocurrencies in Spain is regulated by the Agencia Tributaria, which operates under the official portal https://sede.agenciatributaria.gob.es. 

This is the Spanish tax agency responsible for managing the country's tax system, enforcing tax regulations and ensuring compliance with national tax obligations.

In Spain, cryptocurrencies are categorised as follows:

• Payment tokens are a specific category of cryptocurrency. Such tokens are used in a manner analogous to that of traditional currencies, with examples including Bitcoin.

• Security tokens are defined as follows: Such tokens are frequently utilized for investment purposes, conferring rights analogous to those associated with shares.

• Utility tokens are those which are designed to facilitate the provision of a specific utility or service. The tokens may be used to access services or products, with the possibility of trading.

The enactment of Law 11/2021 saw Spain implement more stringent regulations with the objective of preventing tax fraud involving cryptocurrencies. 

The legislation mandates comprehensive reporting for both resident and non-resident individuals, thereby fostering transparency in cryptocurrency investments.

As someone who has been investing in Spain for some time, it is important to play by the rules. 

Crypto assets are legal, but navigating reporting requirements can be complex, especially as regulations evolve to ensure transparency and prevent fraud. While Spain has made progress in recognising and regulating cryptocurrencies, compliance can feel overwhelming. 

However, these measures protect investors and create a more crypto-friendly environment for those willing to work within the system. To simplify the process, it's wise to consult your Gestor (tax advisor) on the most user-friendly way to declare your crypto assets. 

For 'HODL' investors like myself, understanding these rules is key to a smooth crypto journey.